Davis v. Shah
2016 WL 1138768, 821 F.3d 231 (2016)
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Rule of Law:
Under the Medicaid Act's comparability provision, a state that provides an optional medical service must make it available to all 'categorically needy' individuals who have a medical necessity for it, and cannot restrict access based on specific diagnoses. Furthermore, under the Americans with Disabilities Act's integration mandate, a state cannot implement a policy that places disabled individuals at a serious risk of institutionalization by denying them medically necessary services.
Facts:
- Plaintiffs Harry Davis and others are disabled individuals who qualify for New York's Medicaid program.
- Plaintiffs suffer from various ailments, such as multiple sclerosis and paraplegia, for which their doctors prescribed orthopedic footwear or compression stockings as medically necessary for treatment and to maintain mobility.
- Prior to 2011, New York's Medicaid program covered these items for all beneficiaries for whom they were medically necessary, regardless of the specific underlying condition.
- In 2011, to reduce its budget, New York amended its Medicaid plan to save money.
- The amendments restricted coverage for orthopedic footwear and compression stockings to a specific list of qualifying medical conditions, such as conditions related to diabetes, pregnancy, or children's growth.
- Plaintiffs' medical conditions, while requiring the items for medical necessity, are not on the new, limited list of covered diagnoses.
- As a result of the 2011 amendments, plaintiffs lost their Medicaid coverage for these items.
- Plaintiffs received no individual written notice of this change and only discovered the denial of coverage when their medical providers attempted to fill their orders.
Procedural Posture:
- Harry Davis and other Medicaid recipients filed a class-action lawsuit against the Commissioner of the New York State Department of Health in the U.S. District Court for the Western District of New York.
- The plaintiffs alleged that New York's 2011 Medicaid amendments violated several provisions of the Medicaid Act, the Americans with Disabilities Act (ADA), and the Rehabilitation Act.
- The district court certified the plaintiffs' class.
- On cross-motions for summary judgment, the district court ruled in favor of the Commissioner on the home health services claim but in favor of the plaintiffs on their comparability, due process (notice), and ADA/Rehabilitation Act claims.
- The district court then entered a permanent injunction preventing New York from enforcing the coverage restrictions against any Medicaid beneficiaries.
- The Commissioner (appellant) appealed the district court's judgment to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Does a state's Medicaid plan amendment, which restricts coverage for medically necessary items like orthopedic footwear to beneficiaries with certain enumerated medical conditions, violate the Medicaid Act's comparability provision and the integration mandate of the Americans with Disabilities Act?
Opinions:
Majority - Lynch, J.
Yes, the state's plan amendment violates both the comparability provision and the integration mandate. First, the Medicaid Act's comparability provision requires that the medical assistance provided to any 'categorically needy' individual shall not be less in amount, duration, or scope than that provided to any other such individual. By denying plaintiffs access to medically necessary services solely based on their diagnoses, while providing those same services to other categorically needy individuals with different diagnoses but the same medical need, New York provides an unequal 'scope' of benefits in violation of the Act. A state cannot circumvent this requirement by arbitrarily redefining the 'purpose' of a service to cover only certain conditions, particularly when the decision is based on cost-savings rather than medical judgment. Second, the policy violates the integration mandate of the ADA and the Rehabilitation Act. Following the Supreme Court's ruling in Olmstead, unjustified institutional isolation is a form of discrimination. A plaintiff may state a valid claim by demonstrating that a state's actions pose a serious risk of institutionalization. By denying plaintiffs medically necessary items that maintain mobility and prevent complications, New York's policy places them at a serious and foreseeable risk of requiring institutionalized care, which constitutes discrimination on the basis of disability. While a state has discretion in choosing to offer optional services, once it does, it must do so in a non-discriminatory manner that complies with the ADA.
Analysis:
This decision reinforces the protective scope of the Medicaid Act's comparability provision, preventing states from creating arbitrary distinctions among similarly-situated beneficiaries to achieve cost savings. It limits a state's ability to ration optional benefits by diagnosis rather than by medical need for the categorically needy population. Furthermore, the ruling significantly develops the application of the ADA's integration mandate post-Olmstead, establishing that a 'serious risk of institutionalization,' rather than actual or imminent institutionalization, is sufficient to state a claim. This lowers the bar for plaintiffs challenging state policies that reduce community-based services and will likely impact future litigation over cuts to Medicaid and other state-run disability service programs.
